Greece Should Tell Banks To Kiss My Baklava
All the financial sweepers in Europe are working around the clock, trying to get the Greek debt mess under the carpet or out the door. By the looks of the markets, they were succeeding. But it’s not over yet.
You’ll remember that we gave some advice to the financial officials who are in charge of bailing out Greece? We told them to take a page out of Gerald Ford’s book. Just tell the Greeks to “drop dead.”
Today, we give advice to the Greeks. Tell the bankers to ‘drop dead.’
From what we’ve been able to make out of the rescue plan, they’d be better off rejecting it. Not that we’re in favor of people who don’t play fair. But this deck was always stacked. And the dealer had a few aces up his sleeve at the get go. The way we figure it, the politicians, the banks – notably Goldman Sachs, as well as the big French banks – were in on the whole thing from the get-go.
It would be considered rude to mention it, for example at a champagne-swilling reception hosted by Christine Lagarde, but the whole deal was always corrupt. Goldman Sachs helped the Greeks disguise their debt so they could get in the EU system. Then, more or less the same bankers, advising pension funds, the IMF and the European Central Bank, urged them to buy Greek debt.
When the debt went bad, they organized a rescue – which spared the lenders any losses. And then, when the rescue went bad, they set to work figuring out the terms of a new rescue and warning the Greek people that if they don’t go along, they’ll have to face Armageddon.
The Greeks would be better off calling their bluff. Then, they could go broke with some dignity. They wouldn’t get any more credit. But more credit is the last thing they need. Besides, each time they are rescued, they end up in worse shape, with more debt to pay and higher interest rates to pay on it.
So tell the bankers to ‘drop dead.’
Of course, the Greeks themselves were as corrupt as the bankers. They took their opportunities, too, as they came along. If they could get paid for not working, they didn’t work. If they could get a subsidy and not have to compete in the real world economy, they took the subsidy. If they could retire early, or get something for nothing, or hoodwink investors with some nonsense figures…of course, they did it.
So, there’s a pot. And there’s a skillet. Both are as black as a tax collector’s heart. And now they are both colluding to make sure neither has to reckon with his greed and errors.
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Trouble is, that’s not the way it works. Debt doesn’t go away just because a knave and a fool decide they don’t want it. It’s still there. Like grinning death. It knows it will have its way.
Let’s see how things are going in the U.S. We’re here in South Florida where consumer confidence is falling, just as it in the rest of the nation.
Hey, if there were a recovery, how come consumer confidence is falling?
The answer is simple: there ain’t no recovery and consumers know it. The feds can babble about anything they want, but the typical consumer knows he is in a tough spot…and it’s getting tougher.
The good news: gasoline prices are falling. “But so are home prices in South Florida,” says the Palm Beach Post. House prices rose in 13 cities says the latest news. But not in Miami…which is in Palm Beach county.
Over on page 4 it says “Fla. Seniors insecure about income.” They ought to be. They’ve lost purchasing power for the last 10 years.
Of course, that’s just a part of the story. As we keep saying, the last 10 years has been a ‘lost decade’ – for Florida seniors as well as just about everyone else, except the rich. The middle classes have lost ground on every front.
Their houses are now back to 1990s prices.
Their real incomes have actually gone down.
Their stock portfolios too have lost value in real terms.
And the job market offers them fewer jobs than it did in 2000.
A gallon of gasoline costs only $3.64 in Palm Beach County, down from $3.85 a month ago. But it’s up from $1.30 in 2000.
“Consumers will keep their wallets closed until they feel a heightened level of confidence,” says a source interviewed by the Palm Beach paper.
When will that be? No one knows, but if present trends continue Florida seniors will have turned up their toes long before they turn up their confidence.
Why Greece Should Default and Go Broke With Dignity by Bill Bonner originally appeared in the Daily Reckoning.